Many Arizona homeowners whether they like it or not belong to an HOA. If you are anything like me, you probably do not care for them. I appreciate that it helps to keep my neighborhood looking nice, and some HOA’s, like mine, try to host regular community gatherings. Even still, I do not care for the red tape I have to go through anytime I want to do anything with my yard, and of course I never like writing that check every month (who does?). I do have to admit, the HOA I belong to is very reasonable and the board does a decent job, but mine is the exception. Most HOAs are ruthless – especially when it comes to collecting a debt.
Arizona law favors HOAs as a creditor by providing them with an automatic lien on your home if you fail to pay your regular assessment. This makes HOAs a rather powerful creditor. However, contrary to what your HOA may want you to believe, their debt is not indestructible in bankruptcy – but you have to know how to deal with it.
If you file bankruptcy and want to keep your home, you will likely need to repay any back payments that you owe to your HOA. In a chapter 13, you have tools to assist you with this – one is that you may cure these payments by paying them through the Chapter 13 Plan over the next 3 to 5 years.
Some people decide not to try and save the home, but elect to live in the home as long as possible to help them save money by not making a rent or mortgage payment until the house is actually foreclosed. If this is the case, the bankruptcy will protect you from any payments missed prior to filing bankruptcy, but you must begin paying all mortgage payments that come due after you file the bankruptcy until the house is actually foreclosed.
HOAs are very aggressive. If you are filing bankruptcy to try and escape harassment from your HOA, contact an attorney who knows how to best protect you under the bankruptcy laws.
We offer a FREE consultation! Call Benjamin Skinner, experienced Arizona bankruptcy attorney at (480) 648-8975.